- 1. The periods of mayors and governors changed to three-year term after 1994, and to four-year terms in 2003.
- 2. Before the reform, royalties would automatically be transferred to municipalities in which the extraction of resources was done. In June 2011 the Royalties Reform was approved in Congress, transforming the way in which they were regionally allocated. Instead of just transferring those to municipalities, sub-national entities need to compete for the resources by presenting projects which, in turn, need to be approved by entities with representation from the national, departmental, and local tiers of government.
- 3. In order to increase the efficiency of resource transfers, a reform of the system was undertaken in 2000. In the first place, it created a revenue sharing system (Sistema General de Participaciones, or SGP) that fixed the amount of resources to be transferred and established a 2 percent annual growth in real terms. In addition, the formula to allocate the resources across sub-national entities based on Law 60 of 1993 was also changed by the Laws 715 of2001 and 1176 of 2007.
- 4. According to Rodden (2002), large and persistent deficits occur when the sub-national governments depend strongly on inter-governmental transfers, and have, at the same time, free access to credit, generating fiscal indiscipline.
- 5. As a matter of fact, the territorial debt rose from 1.1 to 3.5 percent of the GDP between 1990 and 1999 (Ministerio de Hacienda 2014). In an effort to better align incentives of politicians to improve their policy performance, the Law 715 determined that the transfer’s distribution would be based on the coverage and growth of the health and education services provided by the territorial entities, and not by population and poverty rates—criteria that had been established by Law 60 of 1993. Concerning the generation of own resources, Congress approved Law 488 of 1998 whereby the base for some sub-national taxes such as the register tax was increased, and Law 1111 of2006, which raised cigarette taxes. In order to augment health revenues, Decree 127 of 2010 increased the rates of the departmental cigarette and liquors tax, as well as VAT for beer and gambling. Furthermore, the gasoline surcharge was unified, and a surcharge on petro-diesel was levied.
- 6. According to Rodriguez (2010), the lack of adequate data may explain why the results have suggested both positive and negative impacts of decentralization. Using panel data techniques, she evaluates the effects of decentralization on the quality of education in public schools, concluding that reforms increase the gap in the results of standardized test preparation applied in public and private schools. She argues that the results are driven neither by the lack of transfers from central government nor by the lack of investment of resources in the sector. They are mainly driven by the increased enrollment of poor students in public schools. When this factor is controlled for, it is found that the public education system serves a larger number of students, besides offering better quality education.
- 7. Law 142 of 1994, Article 15. Other changes introduced by Law 142 were (a) the definition of a pricing regime based on the cost of providing the service, (b) the creation of a control mechanisms of the provider performance enforced by citizens, (c) establishment of a regime of free enterprise which constitutes the base for the entry of the private sector as a provider, and (d) for the implementation of management control and internal control systems within the provider companies. See Krause (2007) for a complete explanation of the differences between EICEs and ESP.
- 8. Also, the Colombian system of user’s fees follows a cross-subsidization approach in which residential users from low socio-economic strata (1, 2, and 3) receive discounts in their fees, which are covered by fees charged from the high socio-economic strata (5 and 6) as well as by the commercial and industrial users. Due to the deficit nature of the scheme in most municipalities, central government transfers partially finance these subsidies. The remaining resources cover a fraction of the investments needed to provide the services, either through direct subsidies to the provider— that could be municipality itself—or through the delivery of physical infrastructure (Silva 2007).
- 9. “En ese entonces, casi que todos los cargos adscritos a la prestacion de estos servicios eran de cuotas politicas. Entonces, que las escobitas: vaya usted, vaya usted; que la persona que se encargaba de la facturacion.
Personas que no teman ni idea que tenian que hacer en un cargo de esos y era asi como se colocaban las posiciones de los cargos en una empresa de pequena estructura que tenia el municipio. No habia politicas claras, no habia directrices, el servicio era practicamente regalado: la gente pagaba 20 pesos por el agua.” Manager, Water Company of el Penol, Antioquia.
- 10. Referring to the municipalities in which the service is provided by private parties, the manager of the Water Company of El Penol argued; “Los alcaldes generan compromisos con ese tipo de gente y vienen, ese modelo es perverso, muchas veces esa gente viene y esa gente de lo que tratan es de escurrir al usuario. Finalmente vienen, lo clavan con unas tarifas exorbitan- tes, le sacan el jugo al negocio, no hacen ninguna inversion y salen y se van con la plata. Entonces yo pienso que una entidad publica, siempre y cuando, se logre manejar con cierta autonomia administrativa, financiera, con cierta independencia del tema politico, si se maneja asi se puede mane- jar con unos criterios de rentabilidad mas que, o sea una rentabilidad economica que le permita ser auto sostenible en el tiempo.”
- 11. This is the term used by politicians to refer to the effort to get money from the national government.
- 12. “Basicamente una buena administracion en este municipio se hace con gestion. Por eso les decia yo ahora que aspiramos a ser una de las mejores administraciones que haya tenido el municipio de Santa Barbara por la coyuntura que tenemos a Leon Dario en la Camara. Porque aparte de todo, el pertenece a la comision tercera, que como ustedes bien saben es la de presupuesto y eso le da ciertas ventajas frente a algunos representantes porque ser ponentes y participar en las ponencias del presupuesto, les dan algunos incentivos.”
- 13. Several specifications were estimated for the years to the last cadastral update: lineal, quadratic, cubic, and diverse forms of dummy variables for the number of cadastral updates.
- 14. The measure of the effective number of parties is the inverse of the Herfindal Index to measure the competition among party shares of votes. The unit of analysis is the political party.
- 15. The GINI is a measure of statistical dispersion and measures the concentration across political parties. Thus, if one party controls all the votes for the House, the “political concentration” is highest (GINI of 1). If more parties do, then the “political concentration” goes down.
- 16. This is the same measure as the effective number of parties, but instead of taking the party as a unit of analysis each candidate is counted independently.